7/28/2019 GFH Capital, Leeds United and Shariah law

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GFH Capital, Leeds United and Shariah lawTUESDAY, 23 OCTOBER 2012 22:53

PAUL MCNAMARA

Questions have been raised over the last week on the level of Shariah compliance surrounding

the mooted takeover of Leeds United Football Club by Dubai-based private equity house GFHCapital a wholly owned subsidiary of Bahrain Islamic investment bank Gulf Finance House.These concerns follow on from raised eyebrows during the preceding week when David Haigh,deputy chief executive officer and chief operating officer of GFH Capital, is alleged to have toldthe UK newspaper The Sun: Leeds is like a young Pamela Anderson. It's in great shape, withsuperb assets and a great future ahead of her... This prompted one industry insider to comment

wryly to The Islamic Globe, He is a Class Act that David Haigh.Another Islamic finance expert told The Islamic Globe, Seems a little weird to have a guyrunning the acquisition who is a fan of the soccer club and is using an Islamic finance institutionto take it over while comparing the club to Pamela Anderson. Pamela Anderson is an actress,model and former showgirl best known for her appearances in TV show Baywatch.

Salem Patel, head of investment management for Gulf Finance House and also a board memberGFH Capital appears to have chided Haigh, mildly but publicly, by asking Haigh on Twitter,Did you describe Leeds United Football Club as a young Pamela Anderson? Really wish you

would keep your private life out of your professional life :). Haighs response, also on Twitter,was Been a lot of rubbish written and made up. It continues it seems. But u have to expect thatwith such a fantastic club.

The Islamic Globes attempts to secure comment from David Haigh were unsuccessful as wewent to press.

However more recent concerns are focused on whether the transaction to buy a soccer clubwhere alcohol, gambling and pork feature in the mix could properly be described as beingShariah compliant. These concerns relate to the clubs ground at Elland Road which houses

traditional British pubs, restaurants that serve pig meat and betting shops.These are the same concerns that have to be addressed whenever Shariah compliant financing isused for any transaction that might feature a hotel or airline since a proportion of the revenuesand profits stem from haram business activities. Very often the problem for the Shariah teamoverseeing the transaction is in establishing the level of significance of the haram revenuestreams since the target of the financing (the hotel, the airline or in this instance the soccerclub) is not set up to identify such streams from an accounting point of view.

There is a generally accepted rule, hammered out over the years on the grounds of practicality,that up to 5 per cent of total revenues can come from non-Shariah compliant sources before theharam revenue streams would prove to be a deal breaker. In such instances it is often acceptedthat the haram revenues should be ring fenced and then donated to charity.